The Canadian dollar strengthened past 1.39 per US dollar, attempting to rebound after trading in a narrow range near early December lows as investors digested a mixed inflation report and a softer US dollar. Headline inflation unexpectedly rose to 2.4% in December, above consensus and slightly firmer than the Bank of Canada’s near-term projection that CPI would hover near the 2% target. While the median core inflation rate eased to a one-year low of 2.5%, signalling some moderation in underlying price pressures, the combination of firmer headline inflation and resilient demand argues for a more cautious pace and timing of rate cuts. The loonie has also drawn support from oil amid steady export flows to the US, constrained near-term supply growth, and a relatively tight North American crude balance that has helped stabilize energy revenues and Canada’s trade outlook. In the meantime, the US dollar weakened following renewed tariff threats from Washington.